Welcome to the latest edition of Great Results, the e-zine from Stuart Cross of Morgan
Cross Consulting. My aim is to give you provocative ideas and practical tools to help you
make a real difference to the performance of your organisation.
Today's edition is called...
Why Innovation Efforts Fail
has never been more important to companies as it is now. The recession is
creating new needs and new forms of value are needed to fulfil
there remains a yawning gulf between business leaders' rhetoric on innovation
and the reality on the ground. So what holds our companies back, and why is
breakthrough innovation so rare? Here are seven factors that prevent successful
- Professional Management.
Robert Sutton has described how, following its early success with Lotus 1-2-3, new senior
managers were brought into Lotus to lead its ongoing growth. The problem was that these
new managers had big company backgrounds and were not used to working in a young,
entrepreneurial business. Innovation quickly stalled. As a test, the chairman then
disguised the CV's of the first 40 people to join Lotus and sent them to the recruitment
team. Not one of the 40 was offered an interview, signalling that the company was
screening out innovative people.
- A desire for a magic pill, not
a daily exercise regime.
Nothing fails like success. All products, services and even organisations will, at some point, fail.
The only way to prolong success is, paradoxically, to destroy it and create something even more
valuable. This requires innovation as a way of life rather than as an isolated change programme.
Over the past 10 years at Whirlpool, for example, many thousands of people have been coached to
use innovation-based tools, embedding innovation as a core competence of the organisation. According
to Whirlpool's annual report, this systematic approach led to $2.5 billion sales in new products
in 2007, and a pipeline of $4.5 billion.
- An unwillingness to cannibalise sales.
Economist Joseph Schumpeter called the symbiotic link between innovation and the elimination
of existing forms of value 'creative destruction'. If you aren't willing to destroy, you aren't
willing to innovate. All technology companies know that they must consistently add new features
at lower prices if they want to stay ahead in the market. The same principles are true in
other markets and Gillette, for example, has consistently strengthened its leadership in
razors through its willingness to make its existing ranges redundant.
- A reliance on a small cadre of innovators.
Quantity of ideas creates quality, and quantity requires broad involvement from a large and
diverse group. Relying on a small business development team to identify, create and deliver
game-changing innovations is simply unrealistic. You have to cast your net much wider. In
the past 5 years P&G has dramatically increased its willingness to work with external
organisations. From developing all its new products in-house, P&G now finds and develops
at least half of its new growth ideas through its external networks.
- An excessive customer focus.
Professional managers, as discussed above, are great at honing existing solutions to
existing customers. The problem with innovation is that people are poor predictors of
their own future behaviour when confronted with something that is radically new. For example,
when Renault designed the Twingo in the late 80's, they tested this innovative small car with
consumers. A majority of those tested did not warm to the car, but a small minority loved it.
Renault held their breath and went with the launch. The Twingo went on to be one of their
greatest successes. Because it was so innovative it initially shocked the majority of car
buyers who needed time to appreciate its benefits.
- An intolerance of failure.
The Business Week #1 top tactic for innovation, as expressed by leading innovators, was to
'experiment fearlessly'. Nothing works first time, so you may as well get it wrong as soon
as you can. If you cannot accept failure you are unlikely to see too much innovation, no
matter how much money you throw at it.
- Setting and rewarding incremental goals.
Incremental goals have a good chance of being delivered by making the current organisation work
that little bit harder. Goals that significantly raise the bar can only be achieved by doing
things differently. Tesco, for example, has announced that it has a five-year profit goal
of £1 million for its Retail Services division. This goal can only be achieved by changing
the way things are done and by introducing new forms of value for customers.
The bottom line
How many of these factors are present in your company? Until you
are willing to set big goals, welcome failure, lead rather than follow customers, involve your
whole organization and beyond, cannibalise your existing businesses, see innovation as a way
of life and recognise the limitations of professional management, you are unlikely to make
real and material progress.
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